Arizona GOP lawmakers propose vehicle license fee increase

PHOENIX (AP) - Republican lawmakers in the Arizona House and Senate are proposing an increase in vehicle license fees to end years of raids on dedicated local highway funding that has paid for highway patrol operations.

The identical proposals from Sen. Bob Worsley of Mesa and Rep. Noel Campbell of Prescott mark the latest effort to end the raid of about $95 million a year that is supposed to fund local roads. Worsley pushed a similar bill last year but it died after Republican Senate President Steve Yarbrough refused to allow a formal vote because it was opposed by many majority Republicans.

Ending the raid on the Highway User Revenue Fund known as "HURF" is a longstanding goal of lawmakers from both parties. The fund raid is particularly hard for rural areas that have no way to pay for repairs and renovations without the state money, which comes from gas taxes and vehicle license fees.

Yarbrough said Wednesday that he'll likely let the proposal proceed this year and see where it ends up. However, he's concerned about how it makes an end-run around a requirement that bills that increase state revenue require a 2/3 vote to pass.

Worsley said this year's effort would raise about $8 million by ending an exemption for alternative fuel vehicles. The rest of the $100 million needed for a dedicated highway patrol safety fund would come from giving the Department of Transportation director authority to raise license fees.

"He decides what's fair," Worsley said. "And every year we're not back here fighting over 'are we going to sweep it or not, how much are we going to sweep' out of the HURF funds."

Worsley said he didn't have an estimate of how much fees could go up. But based on state registration numbers, if every vehicle registered in Arizona was assessed $11, it would raise about $90 million.

Allowing a department director to set the amount is the same maneuver that allows the state Medicaid agency leader to assess hospitals to pay for expanding that program. The Arizona Supreme Court upheld the Medicaid assessment earlier this year, saying it met the test for avoiding a supermajority vote needed to raise taxes under the voter-approved Proposition 108 by allowing state agency directors to set fees.

"I disagreed with the Supreme Court's decision on Medicaid expansion," Yarbrough said. "I think bills like this should be Prop 108 - I think we should be straight up."

Four Republican senators are co-sponsoring the Senate bill, meaning it could pass if all Democrats sign on. Campbell's House version also has three GOP co-sponsors, just shy of the commitment needed to guarantee passage if Democrats back it en masse.

House Speaker J.D. Mesnard said he believes Campbell's proposal could pass this year.

"Considering the number of people who have come to me with the issue of HURF and transportation and infrastructure funding, I imagine it will have a lot of support," Mesnard said.

Worsley also proposed a gas tax increase last year to end the raid, but it also failed. He said he has talked with Gov. Doug Ducey's staff about his new proposal.

"They are not supporting the bill, but they're saying see if you can get it up to us," he said.

Daniel Scarpinato, Ducey's spokesman, said he will support "good ideas" but declined to comment on pending legislation.

Campbell acknowledged that persuading Republicans opposed to tax increases will be difficult and there will likely be blowback in his conservative district. But he said the fee isn't a tax and the need is dire.

"All I know is I'll take heat. But there's three essential things the government has to do, and all the rest are fluff," he said. "The three essentials are transportation, public safety and public education. And for too long we've ignored transportation."

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